Business interruption insurance

Business interruption insurance can cover financial losses if your business has to stop operating after an insured event, such as a fire at your premises. The insurance replaces the money you lose, so that you can keep paying rent, salaries and other fixed costs while the business is at a standstill. Extra costs of getting back up and running can also be covered. The interruption must be caused by damage that your property insurance covers.

How business interruption insurance works

1. Damage stops the business. A fire, a water leak or a break-in means you cannot work, sell or deliver as normal.
2. You report the damage. Tell your insurer as soon as possible that your business operations have also been affected.
3. The insurer calculates the loss. It compares with how the business normally performs, using your books and figures from previous years.
4. The insurer assesses compensation. Any payment depends on the policy limits, terms and indemnity period.

What it covers

Lost gross profit

The core of business interruption insurance. Gross profit is what is left of your sales once the costs that come with them, such as goods and materials, are paid. That is the amount the insurance replaces for the time the business is at a standstill.

Extra costs

Costs of limiting the interruption, such as renting temporary premises or equipment so you can keep working.

The indemnity period

The indemnity period is the longest time after the damage for which the insurance pays your loss. If recovery takes longer, losses beyond that period are generally not covered. Choose an indemnity period long enough to repair the premises or replace what was destroyed.

What is not usually covered

• Interruption without property damage. A downturn, a lost customer or a supplier going bankrupt is not covered.
• The damaged property itself. What was broken is paid by property insurance, not by the interruption part.
• IT outages. An outage following a cyberattack is generally dealt with under cyber insurance.
• Illness. If a key person falls ill, business interruption insurance does not pay the loss. Separate cover for interruption caused by illness may be needed.
• The first period. Many policies have a waiting period, an initial time after the damage that is not covered.
• Vehicles off the road. When a vehicle is out of action after damage, you usually need a separate add-on for it. Read more on the page about transport and haulage.

Who needs business interruption insurance?

It matters most to companies that need their premises, machinery or stock to earn money: retail, restaurants, manufacturing and workshops. A consultancy that can work from somewhere else for a few weeks is usually hit less hard, but rent and salaries keep running all the same.

How much does it cost?

The premium mainly depends on the company's turnover and gross profit, what you do, how long the indemnity period is and how quickly the business can resume operations after damage. Business interruption is often part of a business insurance package. For more on pricing, see how much business insurance costs.

Example: The fire at the bakery. A bakery has a kitchen fire one night. The ovens and the premises need cleaning and repair, and the bakery is closed for six weeks. If the damage is covered, property insurance can pay for the ovens, while business interruption insurance can cover lost gross profit during the closure, so rent and salaries can be paid even though it is closed.

Frequently asked questions

Is business interruption included in business insurance?

Often, but not always. Business interruption is one of the core parts of most combined business insurance policies. Check your försäkringsbrev (the policy document), and make sure the insured amount and the indemnity period match the company's turnover. There is more on the core parts in the guide what does business insurance include.

Why does the interruption have to come from property damage?

Because business interruption insurance is built as an extension of property insurance. It pays the consequences of damage that is already covered, not for business going badly for other reasons.

Does it apply if a supplier has a fire?

Only if the policy includes it, often called contingent business interruption. It is included in some policies and an add-on in others, so check your policy document.